Corruption Crime & Compliance Deep Dive Into Wells Fargo’s $30 Million OFAC Settlement
Wells Fargo has settled with OFAC for $30 million for sanctions violations that occurred during a seven-year period from 2008 to 2015. The violations stemmed from its acquisition of Wachovia Bank, which had a trade relationship with a European bank that conducted transactions involving sanctioned entities and individuals. Despite concerns raised internally, Wells Fargo failed to exercise caution or care in identifying and preventing such transactions. The case serves as a reminder of the importance of corporate culture of ethics and compliance. In this episode of Corruption, Crime, and Compliance, Michael Volkov takes a deeper dive into the issue and outlines the missteps that occurred; he also gives practical advice for companies to avoid the same mistakes.
You’ll hear him discuss these key ideas in this episode:
- Wells Fargo has a lengthy record of misconduct and failures to remediate. Its latest enforcement action involves a $30 million settlement with OFAC for sanctions violations that occurred from 2008 to 2015. These violations include three separate OFAC sanctions involving Iran, Sudan, and Syria.
- Wells Fargo provided the European bank with trade finance software that was customized and used to conduct transactions that involved sanctioned entities and individuals, despite concerns raised internally on several occasions.
- OFAC found that “Wells Fargo demonstrated reckless disregard for US sanctions requirements …and failed to exercise a minimal degree of caution or care in failing to identify and prevent such transactions for seven years after it acquired Wachovia…”
- Wells Fargo's conduct highlights the importance of corporate culture of ethics and compliance.
- Companies must have proper oversight when pursuing new business opportunities or preserving existing business relationships, and must promptly investigate and address sanctions compliance risks when raised internally, even in non-core business lines.
- Comprehensive due diligence regarding potential sanctions risks is necessary when one entity acquires another through merger or acquisition.
- Aside from this part of Wells Fargo's operations, the overall bank had a strong sanctions compliance program.
- If Wells Fargo had invested in a culture of compliance, it could have turned around its organization with wholesale change and a real commitment to embedding, monitoring, and remediating its culture as needed.
- The case serves as a reminder that companies must have a speak-up culture and respond to concerns as they are raised, as well as the importance of corporate culture, ethics, and compliance.
KEY QUOTES:
"If Wells Fargo had reduced its outside legal consulting and professional expenditures by half and took the money to invest and implement a culture of compliance, you can rest assured that Wells Fargo would be able to turn around its organization." - Michael Volkov
"Moreover, when sanctions compliance risks are raised internally, including concerns arising from smaller, non-core business lines, companies should promptly seek to thoroughly investigate and address those risks." - Michael Volkov
"Wells Fargo's conduct here, when exposed and considered, is not just inexplicable, but reminds all of us on the importance of corporate culture of ethics and compliance." - Michael Volkov
Resources:
Michael Volkov on LinkedIn | Twitter